On Tuesday (17 July), following five years of negotiations, the EU and Japan concluded a comprehensive free trade agreement, the Economic Partnership Agreement (EPA). European Commission President Jean-Claude Juncker and European Council President Donald Tusk travelled to Tokyo for the signing ceremony.
Together with Japanese Prime Minister Shinzō Abe, Juncker and Tusk emphasised the importance of the agreement, saying it was “a powerful message to promote free, fair and rules-based trade, and against protectionism”, as the Joint Statement puts it.
The EPA will bring far-reaching facilitations for businesses as well as for consumers in the EU and Japan. The agreement creates a common economic space accounting for more than a quarter of global GDP, with a population of over 600 million people.
Lower prices for European medical devices and agricultural products in Japan, and for Japanese wine and electronics in the EU
With the entry into force of the EPA, tariffs on over 90% of EU exports to Japan will be eliminated. Once the transitional period that applies to some areas, such as agriculture, ends, 99% of all EU exports to Japan will be duty-free. European producers will then save around a billion euros in tariffs in their trading with Japan. This will make European products like meat or cheese from the EU much cheaper for Japanese consumers.
By the same token, the import duties on Japanese imports to the EU will in future largely be eliminated. Electronics and consumer electronics from Japan, for example, have to date been taxed at 14% on import into the EU; Japanese cars faced duties of 10%.
Non-tariff barriers to trade have also been successfully addressed. In the past, differing technical requirements and standards made some EU exports up to 30% dearer. The EU and Japan have now agreed to recognise international norms and standards in a large number of areas, and have agreed mechanisms to avoid such barriers to trade in the future. As a result, it will become much simpler to export things like motor vehicles, pharmaceuticals and medical devices. Both sides retain the right, however, to implement regulations.
High standards for consumers, workers and the environment
In concluding the EPA, the EU and Japan are further expanding their close economic relations. Finalising the agreement was easier thanks to the two partners’ similarly high standards and shared fundamental values.
The EU and Japan both pledge to meet the ILO standards on occupational safety and health. Equally, they reaffirm their commitment to implementing international environmental agreements as well as the Paris climate agreement.
Thus the agreement with Japan, a partner with shared values, shows how the far-reaching removal of trade barriers can go hand in hand with high environmental, consumer and labour standards as well as a strong commitment to sustainability. By putting in place rules on sustainable trade and competition, for example, the EU and Japan are also aiming to further open and develop the global trade system.
The Council of the European Union, representing the national governments, and the European Parliament still need to approve the EPA’s entry into force. The German Bundestag can feed in its views in statements which the Federal Government has to take into account.